ACA Round-Up: Developments Outside Congress

Although attention has been focused on efforts in Congress to repeal and replace the Affordable Care Act, there has been ACA-related activity in the courts and on the administrative front as well.

The Franciscan Alliance Case: Defining Gender Discrimination Under The ACA

On May 2, 2017, the Justice Department (DoJ) filed a brief in the federal district court for the Northern District of Texas in the Franciscan Alliance lawsuit; DoJ asked the court to stay the litigation and remand it to the Department of Health and Human Services to allow HHS to reconsider the regulation at issue in the case. The lawsuit challenges the Obama administration’s regulation implementing the ACA’s section 1557 nondiscrimination regulation insofar as the regulation interprets section 1557’s prohibition against sex discrimination to forbid discrimination based on gender identity and on termination of pregnancy.

Judge Reed O’Connor entered a preliminary injunction enjoining the enforcement of these provisions at the end of 2016, holding that plaintiffs were likely to succeed in their claim that gender discrimination as contemplated in the statute only encompasses discrimination based on biological differences between men and women. The Trump administration chose not to appeal that ruling. It is now asking the court to stay the case to allow it to reconsider the rule’s provisions on these issues, as well as the effect of statutory religious protection provisions on the rule’s abortion provisions.

On May 4, 2017, the Franciscan Alliance filed its response. They asked the court to reject the government’s request for a remand and to rather enter summary judgment in their favor. The plaintiffs asked the court to vacate the current rule insofar as it prohibits discrimination on the basis of gender identity or termination of pregnancy. The plaintiffs argue that the government can change the rule at any time, but that the court should vacate the rule first.  They note that the government has not yet “confessed error” and committed itself to change the rule, and that a motion to intervene by supporters of the rule remains pending and could result in further action by the Fifth Circuit. Finally, the plaintiffs request that, if the court accepts the government’s request, it retain jurisdiction and set a time limit for the government to revise the rule.

Land Of Lincoln And Moda Health Plan Cases: Risk Corridor Litigation

On May 2, 2017, the House of Representatives asked the Federal Circuit Court of Appeals for permission to file an amicus brief supporting the government in the Land of Lincoln risk corridor case.  This is the first of the nearly two dozen risk corridor cases to reach the appellate level. In these cases, insurers claim that the federal government must pay the full amount owing under the ACA’s risk corridor formula and not merely a pro rata share of the funds collected under the program. The Court of Claims ruled against Land of Lincoln, but other Court of Claims judges have sided with the plaintiffs. The House claims an interest in the case by virtue of its constitutional role in appropriations issues. The Federal Circuit has asked the other parties to respond to the House’s motion.

Finally, on May 4, 2017, the government filed a notice that it will appeal to the Federal Circuit Court of Appeals the court of claims judgment in Moda Health Plan v. U.S., the one court of claims decision in a risk corridor case that has granted summary judgment for the health plan and against the government.

Administrative Action: Risk Adjustment Data Validation And QHP Certification

The Trump administration continued to put its own stamp on the implementation of the ACA. First, HHS released on May 3 a guidance on the 2016 HHS-Operated Risk Adjustment Data Validation (HHS-RADV) program. HHS operated the RADV program as a pilot in 2016 for 2015 benefit year data but was scheduled to begin full implementation of the program this year, with payment adjustments for insurers whose reported data were not validated.

Instead, HHS will continue the RADV program as a pilot for a second year. Moreover, small insurers (premium of $15 million or less) and insurers that are not continuing to offer coverage for 2017 will be exempt from the program. Non-exempt insurers that do not submit data or otherwise cooperate with the program remain subject to sanctions and adjustments to their risk adjustment payments.

Second, HHS released at its REGTAP website (registration required) on May 3 a series of slides describing the responsibilities of states for qualified health plan (QHP) certification for 2017. CMS has announced that it will rely on state regulators in some states for reviewing QHP licensure and good standing, network adequacy, service area compliance, and prescription drug formulary outliers and non-discrimination in cost sharing. The slides list the documentation that will be required from QHPs to establish compliance with various certification requirements and the circumstances under which review will be the responsibility of the state or, alternatively, CMS.

 

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